Business Finance MCQs

Question 1

Which of the following is not a source of long-term finance?

Accepted Answer

Trade credit

Answer

Debentures

Answer

Retained earnings

Answer

Equity shares

Question 2

Sometimes, the investors would prefer to pay a stock dividend rather than a regular cash dividend. Which of the following statements are true in such kinds of decisions?

Accepted Answer

All of the above

Answer

They do not provide liquidity to the investors

Answer

They do ensure capital gains to the stockholders

Answer

If investors are not interested in a long-term investment, they will prefer regular cash payments over payments of additional stock

Question 3

Long-term loans from the public is called

Accepted Answer

debentures

Answer

retained earnings

Answer

shares

Answer

public deposits

Question 4

Total of all current assets is called

Accepted Answer

gross working capital

Answer

net working capital

Answer

fixed working capital

Answer

None of these

Question 5

What prompted Bretton woods Agreement?

Accepted Answer

To set up a system that would maintain a stable exchange rate system

Answer

To create a flexible exchange rate system

Answer

To stop World War II

Answer

Eradicate the economic difficulties brought in by World War II

Question 6

Match the following. List-I (Capital Structure Principles) List-II (Features) a. Cost principle 1. Management chooses such combination of sources of financing, which can easily adapt to changes b. Risk principle 2. While designing the structure, the finance manager remembers that existing management control and ownership remains undisturbed c. Control principle 3. Reliance is placed more on equity for financing capital requirements than excessive use of debts d. Flexibility principle 4. Cost of capital structure should be minimised and Earning Per Share (EPS) should be maximised

Accepted Answer

a-4, b-3, c-2, d-1

Answer

a-2, b-1, c-4, d-3

Answer

a-3, b-1, c-4, d-2

Answer

a-3, b-4, c-1, d-2

Question 7

One difference between a financial lease and operating lease is that

Accepted Answer

an operating lease is often cancellable by the lessee

Answer

there is a often a call option in a financial lease

Answer

there is often an option to buy in an operating lease

Answer

a financial lease is often cancellable by the lessee

Question 8

Assertion (A): The comparative cost theory is static in character. Reason (R): The comparative cost theory is based on fixed supplies of factors of production.

Accepted Answer

(A)and (R) both are correct, and (R) is the correct explanation of (A)

Answer

(A) is correct, but (R) is incorrect

Answer

(R) is correct, but (A) is incorrect

Answer

(A) and (R) both are correct, but (R) is not the correct explanation of (A)

Question 9

In the foreign exchange market, the . . . . . . . . of one country is traded for the . . . . . . . . of another country.

Accepted Answer

currency, currency

Answer

currency, financial instruments

Answer

currency, goods

Answer

goods, goods